China cool-headed in face of meltdown

Growth tracks investment

At least 12 documents supporting growth have been released by the State Council this May, ranging from manufacturing upgrades to asset securitization.

Should a hard landing threaten, bringing widespread unemployment or a drop in incomes, the government will not hesitate to intervene.

Monetary and fiscal policies have turned more pro-growth. The central bank has cut interest rates three times since November last year and twice this year has lowered the amount of cash banks must hold as reserves.

In March, mortgage rules for second home buyers were relaxed and tax rules were changed, also in favor of home buyers.

"Stabilizing growth has become a very important task for the government, as we predict growth will slow to 6.8 percent in the second quarter," said Xu Hongcai of the China Center for International Economic Exchanges, a government think tank.

As for fiscal policy, the 2015 fiscal deficit is to be raised to 2.3 percent of gross domestic output from 2.1 percent in 2014 to expand investment in infrastructure and create jobs. Unlike the 4-trillion yuan stimulus package in late 2008, current measures focus on financial burdens for businesses and the provision of public goods and services.

"These measures have been fully debated and rolled out after top-level design, so they should be targeted and effective," Xu said.

New ideas, new growth

The People's Daily, the Communist Party of China flagship newspaper, reported this week that the economy is in line with government expectations.

The government has put emphasis on mass entrepreneurship and innovation especially in emerging sectors such as the Internet, e-commerce, and high-techs. Premier Li Keqiang has been a proactive and enthusiastic supporter of business startup and innovation, visiting inventors and makers around the country this year.

The State Council has introduced tax breaks, social security subsidies and easy business registration to stimulate young businesses, and the number of newly registered firms in China rose by nearly 40 percent year on year in the first quarter.